(Reuters) – The head of the US Securities and Exchange Commission said on Monday that he has asked staff for austerity measures for trading plans that companies use when selling shares they own.
Gary Gensler said that the regulations, known as rule 10b5. -1, should aim to prevent insiders from companies abusing these trading plans to get huge cases at the expense of ordinary investors.
He added that staff should consider restrictions on how these trading plans can be changed or suspended when company staff have access to non-public material information.
"When insiders or companies adopt 10b5-1 plans, there is currently no cooling-off period required before making their first trade," Gensler said at the Wall Street Journal's CFO Network event. "I am concerned that some bad players may perceive this as a loophole in participating in insider trading."
"Suspending a plan can be as financially important as carrying out an actual transaction … because material non-public information can influence an insider's decision to suspend an order to sell."
Trading plans give the company's insiders a structured ways to buy or sell shares without violating insider trading restrictions.
Insiders set up plans in advance and use them to plan future deals, giving managers a defense against insider trading allegations that would result from holding unpublished material. non-public information at the time of trading Information companies sometimes disclose plans to mitigate the perception that executives trade in non-public information Many companies often keep plans in place in these cases even if canceling a plan is not considered a securities transaction.
Mr Gensler said he had asked staff to consider more robust information on the adoption, amendment and conditions of the trading plans and to limit the number of plans that insiders can adopt, including other potential reforms.
Monday's comments come after three Senate Democrats in February called on the regulator to refresh the rules that oversee these plans, which they say lack transparency while maintaining risks that undermine public confidence. Catalog